Winstar Liquidation Sale Stopped Again

A federal judge in Delaware has ordered Winstar Communications Inc., a major provider of government telecommunications services, to continue supplying services for one more day after the bankruptcy auction for the troubled company was delayed a second time.

U.S. District Court Judge Joseph Farnan Jr. has scheduled a teleconference hearing for 3 p.m. Dec. 18. At that time the company is expected to switch its filing to Chapter 7 liquidation.
Left in limbo are the company's customers, especially numerous federal agencies that have been using Winstar for their local telecommunications needs under the terms of Metropolitan Area Acquisition contracts awarded by the General Services Administration over the past several years.

With 14 contracts, Winstar has won more MAA deals than any other contractor. Contracts were awarded to more than one provider in most cities, but Winstar was the sole winner in Baltimore and Cincinnati.

The company filed for Chapter 11 bankruptcy protection in April and subsequently was awarded two of its MAA contracts, including one for Detroit, Nov. 19 ? two days before Winstar announced it was requesting an auction of its assets in early December.

The first auction date, Dec. 10, was delayed when the Federal Communications Commission appealed to the judge to keep the company operating because three federal agencies ? the Securities and Exchange Commission, the FBI and the Defense Department ? could not face service interruptions.

GSA issued a statement Dec. 13 that it was closely watching developments in the Winstar case.

"Continuity of services and seamless transition to a successor service provider are essential to GSA's customer agencies," the statement read. "GSA is working with existing business partners to ensure service remains uninterrupted."

A GSA spokesman declined to comment Dec. 17 on the latest developments in the Winstar case.

Michael Bruno, Washtech.com staff writer, contributed to this story.